IFMP Pakistan Securities Certifications Exam Questions and Answers
Question 1. A one-period project requires an initial outlay of PKR80,000.00 and is expected to pay PKR110,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. PKR30,000.00
B. PKR-20,000.00
C. PKR20,000.00
D. PKR41,000.00
Correct Answer: C. PKR20,000.00
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR110,000.00 for one year
at 10.0% and subtracting PKR80,000.00 gives PKR20,000.00. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 2. An investor buys a put with strike PKR50.00 for a premium of PKR2.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. PKR50.00
B. PKR52.00
C. PKR2.00
D. PKR48.00
Correct Answer: D. PKR48.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or PKR50.00 - PKR2.00 = PKR48.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 3. A settlement manager wants to reduce principal risk in a securities transaction. Which settlement
design best addresses the risk that one side delivers value while the other side does not?
A. Settling the cash leg and securities leg through unrelated manual processes without linkage.
B. Allowing securities to be delivered several days before payment.
C. Replacing settlement confirmation with a marketing disclosure.
D. Delivery versus payment, linking securities delivery to the corresponding cash payment.
Correct Answer: D. Delivery versus payment, linking securities delivery to the corresponding cash payment.
Explanation: Delivery versus payment is intended to link the transfer of securities and cash so that principal is not delivered without
corresponding consideration. This does not eliminate every operational, liquidity, or counterparty risk, but it materially addresses the
classic principal-risk problem. Separating the two legs without effective controls increases rather than reduces settlement exposure.
Question 4. An investor buys a put with strike PKR125.00 for a premium of PKR9.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. PKR134.00
B. PKR9.00
C. PKR116.00
D. PKR125.00
Correct Answer: C. PKR116.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or PKR125.00 - PKR9.00 = PKR116.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Page 1
,Question 5. A pooled fund reports assets of PKR75,000,000.00, liabilities of PKR2,000,000.00, and 15 million units
outstanding. What is the fund's NAV per unit?
A. PKR0.13
B. PKR5.13
C. PKR4.87
D. PKR5.00
Correct Answer: C. PKR4.87
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
PKR73,000,000.00, which produces an NAV per unit of PKR4.87. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 6. A company reports net income of PKR60,000,000.00, preferred dividends of PKR1,000,000.00, and 10
million weighted-average common shares. What is basic EPS using these figures?
A. PKR5.90
B. PKR6.10
C. PKR0.17
D. PKR6.00
Correct Answer: A. PKR5.90
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves PKR59,000,000.00, and dividing by 10 million shares gives PKR5.90. Using
total net income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Question 7. A one-period project requires an initial outlay of PKR150,000.00 and is expected to pay PKR180,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. PKR13,636.36
B. PKR30,000.00
C. PKR48,000.00
D. PKR-13,636.36
Correct Answer: A. PKR13,636.36
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR180,000.00 for one year
at 10.0% and subtracting PKR150,000.00 gives PKR13,636.36. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 8. A company reports net income of PKR40,000,000.00, preferred dividends of PKR3,000,000.00, and 15
million weighted-average common shares. What is basic EPS using these figures?
A. PKR2.47
B. PKR2.87
C. PKR2.67
D. PKR0.38
Correct Answer: A. PKR2.47
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves PKR37,000,000.00, and dividing by 15 million shares gives PKR2.47. Using
total net income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Page 2
,Question 9. A portfolio returned 7.0%, the risk-free rate was 3.0%, and portfolio volatility was 10.0%. What was the
Sharpe ratio?
A. 2.50
B. 0.70
C. 4.00
D. 0.40
Correct Answer: D. 0.40
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (7.0% -
3.0%) / 10.0% = 0.40. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 10. A bond has a face value of PKR100.00, an annual coupon rate of 7.0%, and a market price of
PKR97.00. What is its current yield?
A. 3.09%
B. 7.22%
C. 7.00%
D. 8.00%
Correct Answer: B. 7.22%
Explanation: Current yield equals annual coupon cash flow divided by current market price, so the numerator is PKR7.00. Dividing
by PKR97.00 gives 7.22%. Current yield is not the coupon rate and it is not yield to maturity because it ignores the timing and
amount of the redemption cash flow.
Question 11. A trader takes a short futures position at 200.00. The contract multiplier is 50, and the position is
closed at 205.00. Ignoring fees and daily financing effects, what is the profit or loss per contract?
A. PKR250.00
B. PKR450.00
C. PKR5.00
D. PKR-250.00
Correct Answer: D. PKR-250.00
Explanation: Futures profit or loss equals the price change multiplied by the contract multiplier, with the sign determined by
whether the position is long or short. For this short position, the result is PKR-250.00. The contract's quoted price change alone is
not the cash profit or loss because the multiplier converts the quotation into contract value.
Question 12. A one-period project requires an initial outlay of PKR100,000.00 and is expected to pay PKR90,000.00
one year later. At a discount rate of 12.0%, what is the NPV?
A. PKR-10,000.00
B. PKR19,642.86
C. PKR800.00
D. PKR-19,642.86
Correct Answer: D. PKR-19,642.86
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR90,000.00 for one year at
12.0% and subtracting PKR100,000.00 gives PKR-19,642.86. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Page 3
, Question 13. Under a stated convention, a company has debt of 40 million and shareholders' equity of 125 million.
What is its debt-to-equity ratio?
A. 0.32
B. 1.32
C. 3.12
D. -0.68
Correct Answer: A. 0.32
Explanation: Debt-to-equity compares the specified debt balance with shareholders' equity. Using the stated convention,
= 0.32. Analysts should verify the precise debt definition before comparing companies because some conventions include or
exclude particular liabilities.
Question 14. A candidate preparing for IFMP Pakistan Securities Certifications encounters the following
description: “An assessment of whether a recommendation fits the client's objectives, financial circumstances,
knowledge, horizon, and risk profile.” Which term is most directly associated with this description?
A. Suitability assessment
B. Risk capacity
C. Risk tolerance
D. Product due diligence
Correct Answer: A. Suitability assessment
Explanation: Suitability assessment is best understood as an assessment of whether a recommendation fits the client's objectives,
financial circumstances, knowledge, horizon, and risk profile. This interpretation is consistent with the way the concept is applied in
professional securities and investment practice, including activity overseen by Securities and Exchange Commission of Pakistan
(SECP). The other choices describe different concepts or would lead to a materially different risk, trading, valuation, or compliance
conclusion.
Question 15. A share trades at PKR20.00 and pays annual cash dividends of PKR4.00 per share. What is the
dividend yield based on the current price?
A. 5.00%
B. 80.00%
C. 4.00%
D. 20.00%
Correct Answer: D. 20.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. PKR4.00 /
PKR20.00 × 100 = 20.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 16. A candidate preparing for IFMP Pakistan Securities Certifications encounters the following
description: “A relationship between yields and maturities for comparable debt instruments at a point in time.”
Which term is most directly associated with this description?
A. Monetary easing
B. Business cycle
C. Real return
D. Yield curve
Correct Answer: D. Yield curve
Explanation: Yield curve is best understood as a relationship between yields and maturities for comparable debt instruments at a
point in time. This interpretation is consistent with the way the concept is applied in professional securities and investment practice,
including activity overseen by Securities and Exchange Commission of Pakistan (SECP). The other choices describe different
concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Page 4
Question 1. A one-period project requires an initial outlay of PKR80,000.00 and is expected to pay PKR110,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. PKR30,000.00
B. PKR-20,000.00
C. PKR20,000.00
D. PKR41,000.00
Correct Answer: C. PKR20,000.00
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR110,000.00 for one year
at 10.0% and subtracting PKR80,000.00 gives PKR20,000.00. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 2. An investor buys a put with strike PKR50.00 for a premium of PKR2.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. PKR50.00
B. PKR52.00
C. PKR2.00
D. PKR48.00
Correct Answer: D. PKR48.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or PKR50.00 - PKR2.00 = PKR48.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 3. A settlement manager wants to reduce principal risk in a securities transaction. Which settlement
design best addresses the risk that one side delivers value while the other side does not?
A. Settling the cash leg and securities leg through unrelated manual processes without linkage.
B. Allowing securities to be delivered several days before payment.
C. Replacing settlement confirmation with a marketing disclosure.
D. Delivery versus payment, linking securities delivery to the corresponding cash payment.
Correct Answer: D. Delivery versus payment, linking securities delivery to the corresponding cash payment.
Explanation: Delivery versus payment is intended to link the transfer of securities and cash so that principal is not delivered without
corresponding consideration. This does not eliminate every operational, liquidity, or counterparty risk, but it materially addresses the
classic principal-risk problem. Separating the two legs without effective controls increases rather than reduces settlement exposure.
Question 4. An investor buys a put with strike PKR125.00 for a premium of PKR9.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. PKR134.00
B. PKR9.00
C. PKR116.00
D. PKR125.00
Correct Answer: C. PKR116.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or PKR125.00 - PKR9.00 = PKR116.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Page 1
,Question 5. A pooled fund reports assets of PKR75,000,000.00, liabilities of PKR2,000,000.00, and 15 million units
outstanding. What is the fund's NAV per unit?
A. PKR0.13
B. PKR5.13
C. PKR4.87
D. PKR5.00
Correct Answer: C. PKR4.87
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
PKR73,000,000.00, which produces an NAV per unit of PKR4.87. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 6. A company reports net income of PKR60,000,000.00, preferred dividends of PKR1,000,000.00, and 10
million weighted-average common shares. What is basic EPS using these figures?
A. PKR5.90
B. PKR6.10
C. PKR0.17
D. PKR6.00
Correct Answer: A. PKR5.90
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves PKR59,000,000.00, and dividing by 10 million shares gives PKR5.90. Using
total net income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Question 7. A one-period project requires an initial outlay of PKR150,000.00 and is expected to pay PKR180,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. PKR13,636.36
B. PKR30,000.00
C. PKR48,000.00
D. PKR-13,636.36
Correct Answer: A. PKR13,636.36
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR180,000.00 for one year
at 10.0% and subtracting PKR150,000.00 gives PKR13,636.36. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 8. A company reports net income of PKR40,000,000.00, preferred dividends of PKR3,000,000.00, and 15
million weighted-average common shares. What is basic EPS using these figures?
A. PKR2.47
B. PKR2.87
C. PKR2.67
D. PKR0.38
Correct Answer: A. PKR2.47
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves PKR37,000,000.00, and dividing by 15 million shares gives PKR2.47. Using
total net income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Page 2
,Question 9. A portfolio returned 7.0%, the risk-free rate was 3.0%, and portfolio volatility was 10.0%. What was the
Sharpe ratio?
A. 2.50
B. 0.70
C. 4.00
D. 0.40
Correct Answer: D. 0.40
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (7.0% -
3.0%) / 10.0% = 0.40. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 10. A bond has a face value of PKR100.00, an annual coupon rate of 7.0%, and a market price of
PKR97.00. What is its current yield?
A. 3.09%
B. 7.22%
C. 7.00%
D. 8.00%
Correct Answer: B. 7.22%
Explanation: Current yield equals annual coupon cash flow divided by current market price, so the numerator is PKR7.00. Dividing
by PKR97.00 gives 7.22%. Current yield is not the coupon rate and it is not yield to maturity because it ignores the timing and
amount of the redemption cash flow.
Question 11. A trader takes a short futures position at 200.00. The contract multiplier is 50, and the position is
closed at 205.00. Ignoring fees and daily financing effects, what is the profit or loss per contract?
A. PKR250.00
B. PKR450.00
C. PKR5.00
D. PKR-250.00
Correct Answer: D. PKR-250.00
Explanation: Futures profit or loss equals the price change multiplied by the contract multiplier, with the sign determined by
whether the position is long or short. For this short position, the result is PKR-250.00. The contract's quoted price change alone is
not the cash profit or loss because the multiplier converts the quotation into contract value.
Question 12. A one-period project requires an initial outlay of PKR100,000.00 and is expected to pay PKR90,000.00
one year later. At a discount rate of 12.0%, what is the NPV?
A. PKR-10,000.00
B. PKR19,642.86
C. PKR800.00
D. PKR-19,642.86
Correct Answer: D. PKR-19,642.86
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting PKR90,000.00 for one year at
12.0% and subtracting PKR100,000.00 gives PKR-19,642.86. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Page 3
, Question 13. Under a stated convention, a company has debt of 40 million and shareholders' equity of 125 million.
What is its debt-to-equity ratio?
A. 0.32
B. 1.32
C. 3.12
D. -0.68
Correct Answer: A. 0.32
Explanation: Debt-to-equity compares the specified debt balance with shareholders' equity. Using the stated convention,
= 0.32. Analysts should verify the precise debt definition before comparing companies because some conventions include or
exclude particular liabilities.
Question 14. A candidate preparing for IFMP Pakistan Securities Certifications encounters the following
description: “An assessment of whether a recommendation fits the client's objectives, financial circumstances,
knowledge, horizon, and risk profile.” Which term is most directly associated with this description?
A. Suitability assessment
B. Risk capacity
C. Risk tolerance
D. Product due diligence
Correct Answer: A. Suitability assessment
Explanation: Suitability assessment is best understood as an assessment of whether a recommendation fits the client's objectives,
financial circumstances, knowledge, horizon, and risk profile. This interpretation is consistent with the way the concept is applied in
professional securities and investment practice, including activity overseen by Securities and Exchange Commission of Pakistan
(SECP). The other choices describe different concepts or would lead to a materially different risk, trading, valuation, or compliance
conclusion.
Question 15. A share trades at PKR20.00 and pays annual cash dividends of PKR4.00 per share. What is the
dividend yield based on the current price?
A. 5.00%
B. 80.00%
C. 4.00%
D. 20.00%
Correct Answer: D. 20.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. PKR4.00 /
PKR20.00 × 100 = 20.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 16. A candidate preparing for IFMP Pakistan Securities Certifications encounters the following
description: “A relationship between yields and maturities for comparable debt instruments at a point in time.”
Which term is most directly associated with this description?
A. Monetary easing
B. Business cycle
C. Real return
D. Yield curve
Correct Answer: D. Yield curve
Explanation: Yield curve is best understood as a relationship between yields and maturities for comparable debt instruments at a
point in time. This interpretation is consistent with the way the concept is applied in professional securities and investment practice,
including activity overseen by Securities and Exchange Commission of Pakistan (SECP). The other choices describe different
concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Page 4
